Tod’s Q1 Sales Flat Despite New Store Revenue

Milan—Tod’s Group reported Wednesday that its first quarter sales were basically flat as its comp sales posted a decline.

For the quarter, the parent to Tod’s, Hogan and Roger Vivier said sales reached 253.8 million euros (about $348 million) due mostly to increased sales in Japan, Korea and in Europe outside of Italy. Analysts’ estimate expected $245.8 million euros in sales.

While sales in its home country of Italy continued to slide, down 10% compared with a year ago. The rest of Europe had an 11.4% increase in sales. Great China, however, was down 1% and the Americas fell 3%. Comp store sales were down 6.7%.

20 New Stores Planned

While the footwear and accessories company didn’t provide any net profit figures, it reported that its earnings before interest and taxes stood at €46.3 million, down from €53.4 million in the first quarter of last year.

By brand, Tod’s brand was up 0.8%, Hogan down 7.2%, Fay up 6% and Roger Vivier up 20%.

Tod’s stated that its first quarter sales continue to feel the effects of a strategic decision to narrow its wholesale distribution, mainly in Italy, “with the goal to preserve the brands’ exclusivity and positioning, but also to improve the already very good quality of the credit portfolio.”

Helping to mitigate sales declines was the addition of new retail doors. “The real explanation is … the added selling surface or … the number of stores,” Chief Financial Officer Emilio Macellari said on a conference call, noting about 25 stores had been added to a network of just under 200 since end-March 2013.

The company plans to open around 20 shops this year, Macellari said, including 11 to 13 in China. It has opened more than 50 new shops in Greater China since 2008.

For the full year Macellari said he expected a smaller drop in like-for-like sales than seen in the first quarter. Further shop openings and the wholesale business should allow the company to meet sales growth consensus to more than 3%.

Marcellari cautioned though that EBITDA margins have been “challenging” as analysts blamed the company’s reliance on footwear—about 77% of total. Even though sales of higher margin leathergoods and accessories rose 9.4% in the first quarter, Macellari said they were unlikely to continue.

“I think it is more a temporary effect of the first quarter rather than a sustainable growth rate for the full year 2014,” Macellari added.